Good morning, and welcome to the MGM Resorts International Second Quarter 2014 Earnings Conference Call. Joining the call from the company today are: Jim Murren, Chairman and Chief Executive Officer; Dan D'Arrigo, Executive Vice President, Chief Financial Officer and Treasurer; Grant Bowie, Chief Executive Officer of MGM China Holdings, Limited. [Operator Instructions] Please note this event is being recorded. Now I would like to turn the call over to Mrs. Sarah Rogers. Please go ahead.

Hi, good morning, and welcome to MGM Resorts International's Second Quarter Earnings Call. This call is being broadcast live on the Internet at mgmresorts.com. A replay of the call will be available on our website, and we furnished our press release on Form 8-K to the SEC this morning. On this call, we will make forward-looking statements under the Safe Harbor provisions of the federal securities law. Actual results may differ materially from those projected in the forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those -- in these forward-looking statements is contained in today's press release and in our periodic filings with the SEC, included in our most recent Form 10-K. During the call, we will also discuss non-GAAP financial measures in talking about the company's performance. You can find the reconciliation of these measures to GAAP financial measures in our press release, which is available on our website. Finally, please note that this presentation is being recorded. With that, I'll turn it over to Jim.

Well, thank you, Sarah, and good morning, everyone. We think this quarter is a really good example of the power of being a leading operator here in Las Vegas. Our Strip properties drove the bulk of our EBITDA growth this quarter with wholly-owned Strip EBITDA, up 12%; and CityCenter resort operations EBITDA, up 20%. MGM China posted a real solid quarter and increased its margins and EBITDA, and that was driven by an increase in mix from the high-end main floor business. That high-margin business continues to grow for us. Our key markets are continuing to grow, and we continue to invest and focus where we see opportunity. In May, for example, MGM and AEG broke ground on our new arena here, targeted to open in mid 2016. This is going to be, really, a spectacular arena, and it will attract a lot of new events to the market and enable existing events that we host to grow in scale, and that is a very important component to our goal of ensuring that Las Vegas continues its leadership in entertainment, and we, at MGM, continue to capture an outsized share of that business. In June, New York-New York unveiled its Hershey's store to great success, and it's adding 2 new restaurant venues, Tom's Urban and the ever popular Shake Shack, which will open up in December. Mandalay Bay is winding down its remodel of The Hotel into the Delano. At this point, over half the rooms are complete and the name, I'm happy to say, is up on the building. The official opening is scheduled for September 1, and we believe that the Delano brand, combined with a spectacularly remodeled property, will command far better rates and attract a higher-quality, higher-margin customers. Ultimately, that's the business that we're in of…

Thank you, Jim, and good morning, everyone. We are continuing to deliver consistency and improved operations as this is MGM's seventh consecutive quarter of year-over-year Strip EBITDA growth and margin improvement. All of our properties on the Strip showed year-over-year improvements in EBITDA. We are seeing a more unified recovery as luxury Strip properties grew EBITDA 13%, and our combined mid-tier and value resorts increased by some 8%. Our mid-tier and value resorts actually outperformed the luxury portfolio in terms of REVPAR growth for the second quarter in a row. On the casino side, the market was led by extremely strong Baccarat growth. Our wholly-owned Baccarat win was up 64% in the quarter and non-Bacc table games win was up 10%. Clearly, the customer relationships we have developed in Asia are benefiting MGM Resorts in Las Vegas, and we expect this trend to continue. On our last call, we guided for 5% Strip REVPAR growth during the second quarter, and we actually achieved 6%. We were able to grow our convention mix by about 1 percentage point year-over-year during the quarter. The in-the-year, for-the-year convention businesses is filling in nicely, and we now expect our full year convention mix to be above 16%, 1-6 percent, and actually above prior peak levels. Looking at the third quarter, we expect to continue to grow our convention mix and anticipate REVPAR growth of approximately 5% in Q3. At CityCenter, second quarter EBITDA from resort operations increased 20%, led by ARIA's strong 23% increase in their EBITDA contribution, driven by increased table game volume and hold. REVPAR at ARIA increased 6%, including record quarterly occupancy of some 94.4%. Vdara had a record quarter, driven by a 10% increase in REVPAR and occupancy just inside of 95%. Crystals reported another strong quarter of $11 million…

Thanks, Dan, and good evening, and good morning. MGM China property EBITDA was up 3% year-over-year, at $225 million before branding fees of $14.5 million, and that was on net revenues of $828 million, a decrease of about 1% year-over-year due to a lower VIP hold and lower turnover. Our EBITDA margin increased by 90 basis points year-over-year due to the higher contribution, as Jim indicated, from the high-margin main floor business. The VIP turnover decreased by 10% year-over-year. Our overall hold rate was 2.7% with -- compared with 2.9% last year due as we indicated to lower in household. Hold negatively impacted our EBITDA by roughly $14 million year-over-year. A number of lower performing junket tablets were relocated to main floor since the beginning of the year, a strategy which we will continue as we balance our allocation to maximize our yield. We had a record quarter on the main floor operation. Main floor table games win increased by 41% year-over-year, and this is the second consecutive quarter of outperforming the overall market growth. And this growth was being driven at MGM and on the Peninsula, in general, and is reflective of a sustainable appeal of the MGM and other quality venues on the Peninsula. The main floor table games and slots continue to grow as a percentage of our EBITDA and during the second quarter, represented 77% of EBITDA, up from 70% last quarter. This high contribution from the mass has certainly increased our stability and improved margins. Slot handle increased 13%, but our slot revenues decreased by 11% year-over-year due to lower hold. But we continue to be one of the top market share properties in the slot segment. The Peninsula, clearly, continues to be an attractive and growing market. To maintain this in the future, we…

Thank you, Grant. And I just got to also thank you for your efforts there. It's quite clear to all of us, and I'm sure it is now to investors, that Grant and his team are the most seasoned operators in Macau. Grant himself has been a pioneer in the marketplace. He invented the sky casino concepts that others subsequently copied. He invented the premium mass segmentations with our supreme and platinum lounges, which have been so successful for us and others have taken note and copied. MGM has the best win per day in the market in the mass segment and as Grant mentioned, we're consistently one of the highest market share companies in slots. And we've always outperformed the market when we have seen periodic slowdowns in the VIP business in Macau. We've never had a more integrated set of operations between MGM China and MGM Resorts as we do right now, and that combination is yielding very strong cross-marketing results. We're seeing it also accrue to the benefit of our employees as they move back and forth between companies. It certainly has helped us on customer acquisition going both ways. It has helped us tremendously in employee retention in Macau and also here in Las Vegas. A little more on MGM Cotai because we've made great progress there, and it's such a dynamic market, I know there will be questions and updates. We're happy to say that we've now awarded about 50% of all the contracts, which is why Grant has more clarity on the $2.9 billion budget. We haven't missed a beat on construction, and we have received our permitting, both for the superstructure and for the MEP, and we continue to be the kind of company there, the government expects us to be, which is…

[Operator Instructions] And our first question is from Felicia Hendrix of Barclays.

Since you entered in Macau, I'll start with Macau. Grant, just a question on your margins. They were definitely better year-over-year. Just the flow through was a bit lower than what we were expecting. Was that mainly driven to the low hold that you discussed, or were you seeing also higher operating costs? And if it was higher operating costs, both WYNN and LVS called out bonus accruals in their releases as partially driving lower EBITDA, and I believe that you guys also pay a 14-month bonus, but I didn't see any commentary in the release about that.

Thanks, Felicia. I can always know you to keep the pressure on. In terms of the margins, they are pretty claimed. There's really nothing exceptional in there. I think we indicated that we actually had fully accrued into last year's results the 14 months that we actually paid, so we didn't have any adverse effect and, by and large, the performance in the costs are pretty consistent. You are correct that obviously, the low hold had an impact on margin, but the strength for that 41% increase in the mass table games certainly provided the bulk of that improvement. So overall, the revenues were moving faster, the mix change had impact, so I think it's a pretty clean margin number, and we really don't have any unusual costs sitting in our -- any unusual costs that will have a one-off effect because we actually planned for and actually accrued it into the periods.

Perfect, that's really helpful, I appreciate that. And then Jim and team just moving over to Vegas. Most of your retail properties performed better in the quarter than we expected both in terms of REVPAR and flow through. I was just wondering if you could talk for a moment about what's driving that. Would you say it's more coming from company initiatives, or is it more of a general return to the market segment? Is it both? And then also just in answering the question, the one property that did stand out to us as having lower flow through was Monte Carlo, so just wondering if there was anything specific going on at that property.

Sure, Felicia. This is Dan. Yes, when we looked at the second quarter, we were overall pleased with the results. There is always things up and down in each and every quarter, and you're pointing out one of them, which is Monte Carlo. I think overall, we're pleased with the performance, but we still continue to stay laser-focused on the expense side and on the flow through. I think for the quarter, we came in at about 37% flow through in the quarter, which is a little bit below our previously stated range. Monte Carlo did impact that as we continue to kind of position that property going forward. In the second quarter, we had quite a few restaurants and retail outlets that opened up and really are repositioning that property in the second quarter to actually give it a front door, and now we're working through the ramp-up of those facilities and the traffic patterns with a new configuration. So that was impacted in the quarter and clearly, that's something that over time will rectify itself as those facilities ramp-up and take hold. The other piece is probably something to kind of mention, is also about the -- at Mandalay, the Delano impacted our flow through. As we reposition and rebrand that property, you're incurring expenses given the hotel, within a hotel concept that are just hitting expense and aren't pre-opening or aren't capitalizing in any way, shape or form. So as we reposition that property through September and October here to its official launch and fully complete it, that, too, impacted the margins. But longer term, as these properties continue to kind of work through those issues, we think that guidance-wise, flow through is still in that 50% to 60% range.

And, Felicia, this is Corey. It is partially -- the economy is positive for us, but our company initiatives have really paid off, especially on our yielding front and how we're attacking the convention market. We've been very aggressive in buying back space and utilizing that space, the best we can. I think you've seen us gain even some market share in the convention business, as well as market share in growing our REVPAR.

Our next question is from Joe Greff of JPMorgan. Joseph Greff - JP Morgan Chase & Co, Research Division: If you back out Mandalay and Monte Carlo, I think flow through is just about 50%. When you look at the 3Q and the 4Q, obviously, the Delano is going to open up September, October, as you've mentioned, do you expect some of the expenses or some of these challenges to continue in the near term that we should be mindful of, that would get you below 40% to 50% of flow through?

Joe, it's Jim. That's entirely possible. I mean, I think I would look at it in the following ways that the Japanese have a word called Kaizen. It means continuous improvement. And we're doing that on these properties, which means periodically, 1 or 2 of them are going to fall below our target of 50%. And in the case of Monte Carlo and Mandalay, they probably will in the third quarter as well, those 2. We're not giving up, but they probably will as a result of the fact that the lobby at The Hotel, now, Delano is completely ripped up, and we've had to be very generous to our customers to reward them for staying in a property that has been less than appealing going through that process. In the case of Monte Carlo, a lot of start-up expenses as we've been promoting some brand-new restaurants that are new to the entire market. So there's some brand awareness spending that we've been doing. But that target is, I think, a worthy one. And I'd make a couple of points on margin, because really I think that's what you're getting at in terms of the operating leverage in the business. I look back on this, but -- you probably know, but our wholly-owned margins, they peaked at 34% back in the first quarter of '06. Those were good days back then. We all loved those days. And then they troughed in the fourth quarter of '10 at 19.7%, so we went from 34% to under 20%. In this quarter that Dan was just talking about, they increased 80 basis points year-over-year to 25.3%. In fact, that's the seventh quarter in a row that they've been increasing year-over-year. But on a peak basis, if you look at annually, our peak margin,…

And Joe, Delano will open officially in September, so fourth quarter should be fairly clean from those pre-opening expenses. Joseph Greff - JP Morgan Chase & Co, Research Division: Corey, how does 2015 look and shape up in terms of group, if you can talk about group pace? And then another question. Jim, you mentioned the CapEx going up due to scope changes in Maryland. Have your EBITDA returned assumptions or under underwriting assumptions changed, along with those scope changes? And that's all for me.

Well, I will take the second one, and I'll turn it over to Corey. Yes, so I mean, the great results that Maryland Live! has generated, our market analysis that's been more precise we're doing quite a bit more work in the Virginia-D.C. market in terms of market potential. Moving over some great personnel into that marketplace. We mentioned earlier, Anton Nikodemus has been involved in the regionals, combined with Lorenzo Creighton and our team. We've put more marketing effort behind here, and we're highly bullish on this particular location, which is why we feel it's very prudent now to not only expand out the public space, which will accommodate more gaming and entertainment, but to create the support structure to build on to the second floor, build the second floor expansion that could include gaming and convention space for the future. So almost -- well, 75%, 80% of that increase is all simply through increasing the square footage of the project.

And on the convention side, Joe, for 2015, our pace is up double-digit, with rate being up also, and that's despite a tough comparison with CON/AGG.

Our next question is from Harry Curtis of Nomura.

Over to Macau, if you could talk about the competitiveness in the mass segment. There's some discussion about it becoming more promotional and, Grant, if you could give us some perspective on whether or not that's true.

I think it's quite true that as things develop, it always becomes more competitive and I think we all are pretty sensible in this market, and we need to be very focused on the reinvestment rate. As you can see, we have not really seen any significant change and I think our focus will continue and I know a number of other venues are going to be about the quality of experience and the quality of the property rather, than just simply hitting the price button. So at the moment, yes, it's competitive, but I think the focus tends to be on competitiveness through quality of delivery. And different organizations have different constructs, but at the top end, the quality end of the market, I'm pretty comfortable and pretty confident that we can hold the position.

So you see the margins in mass bottom line staying pretty stable?

Yes. I think if you look through the different groups, the different organizations, Harry, there's already different margin arrangements. And so I think the relationship between the organizations, I think, are pretty stable.

Okay. And then, Corey, just coming back to your comment about next year. You mentioned the group pace being up double-digit. Can you give us a sense of what sort of pricing you're seeing on that? And specifically, the first quarter is really tough. Can you discuss how replacing CON/AGG is going from a pricing perspective?

Sure.

I'll just -- rates for 2015 look to be up kind of low-single-digit percentages, which is actually very good because you're comping against CON/AGG in the first quarter.

And first quarter is filling in nicely, Harry. We're actually up in rooms and looking at the first quarter. We're in the middle of our budget season right now, and we'll have better information later on.

So if you're up at this point, low-single digits, you would expect that to lift as we get closer to the beginning of 2014 or '15, rather?

One would hope, but we're also against the challenge of that big week, where you had major rate inflation last year.

Our next question is from Grant Govertsen of Union Gaming.

Could you talk about trends in regards to high-end Baccarat play at your Vegas properties? Specifically, are you seeing any incremental VIP play migrate from Macau these days, given the current Macau and China dynamics? Or is it simply the continued ramping of general demand from China and elsewhere, including from your hospitality JV in China?

Well, there's no doubt that we're getting more high-end business here in Las Vegas as a result of our increased visibility in Macau. And the combined efforts of the U.S. operators that are in Macau, bringing customers to Las Vegas benefits all of us here. So we get a good share of that play regardless of who brings them over here. And our competitors get a good share of our customers' play when we bring them over. It's the nature of this business. So that will be the primary impetus for seeing some good Baccarat play. Also, our events have been very compelling. So when we had the Mayweather fight in May, you saw a tremendous Baccarat number in the city and many of us benefited from that. We have another Mayweather fight, by the way, next month in September, which is shaping up to be a highly sought-after event, which is encouraging for that quarter. On the hospitality side, I'd say less so. It's still early days on hospitality. Once we open a hotel in a major market like Beijing or Shanghai, the 2 projects that are under development right now, that will have a bigger impact. But as we stand right now, our 2 hotels are in Sanya, which is in Hainan Island, which really more benefits MGM Macau because of the cross-marketing and the proximity between those and a really small hotel in Chengdu, which is a very luxurious property but very small, and not intended to send a lot of customers here.

Understood. And then just a quick one for Grant in Macau. You mentioned that slot volume was up notably, but revenues were down. Was that a function of a couple of high rollers dinging you a little bit, or is that the mix issue with more e, electronic, table games and, correspondingly, lower hold rate?

As you know, we are obviously very strong in the premium end of the market, and you are correct, we did have some players who were very, very lucky. I'm not sure if people understand that those games that they play are reasonably volatile games too, with quite high returns on it. So it's a stabilized, and we have seen coming into this month that we've actually won quite a bit of that back.

Your next question is from Robin Farley of UBS.

I have one Macau question and one Vegas. In Macau, I guess, some in the market had thought that July was showing some signs of improvement during the month and then it doesn't look like the month ended that way. And I wonder if you could just give us your perspective on how you see things shaping up in Macau as you sort of look out over the next few weeks? And just to get a sense of whether things have, in fact, stabilized or kind of we're still seeing more June and July trends?

I think there's been some continued observation that the premium business, the junket business, is still consolidating, still stabilizing. We're seeing volumes begin to increase again. But I think there's a whole series of issues going on that we're well aware, and in China that has taken some of the energy out of the sector and I think we just see that continued consolidation. In the mass business, it just continues to be very strong and I also would see that would likely ramp-up. We're obviously in the summer season, and in some ways, we've seen a couple of years, the summer season, we see some of the business slow down somewhat. We are almost getting some of the trends we're seeing in other marketplaces that during the summer the business is not as strong. But overall, still continue to be very positive on the mass market, looking very strongly at it. Confident in the junket business. See this as a period of consolidation and a comparative realignment, and as we work through this, as we saw back in 2008, 2009 that there is a general confidence still within those operators that as we get into the end of the year and into 2015, they are particularly positive themselves about the growth opportunities going forward.

Okay, great. That's helpful. And then on Vegas, just to circle back on you talked about rates being up in Q1 against CON/AGG, I guess, that was convention rate on the books for Q1 being up year-over-year. Can you give us any color on convention room nights in Q1 on the books versus prior year, because I think would -- I think that will be a difficult comp as well?

Well, right now, just based on pace, we're up 16,000 rooms in Q1.

Yes. So the General commentary is just across the board in 2015 pace is looking up year-over-year, with a slight increase in rate and that applies to the first quarter as well.

Our next question is from Shaun Kelley of Bank of America Merrill Lynch.

I just wanted to try and close the loop on Las Vegas and the flow-through commentary. So just to go back to that for a moment, it sounded like you're a little bit less confident in the third quarter, flow-throughs you guys might see just given some of the same issues with Delano renovation and Monte Carlo. Do you think 50% to 60% is achievable for the year, or with kind of Q2 and Q3 disruption, that's probably not going to happen this year, but then, I guess, do you think it's possible next year to hit that rate?

Well, first, we're just talking about 2 properties. I think, year-to-date, we're 45% right now, even with disruption we've had in 2 of our 10 properties here. So we certainly don't, at this point in time, expect us not to achieve our goal for the year. We were just highlighting in the second quarter, a little bit into the third, but not the full third in the case of the Delano. You can have -- you most likely will have a very strong September as a result of that swinging into very incremental, very additive operations for us, and for Mandalay, in general. So I think we're just trying to highlight the fact that, since the question was asked on why we were a little bit lower than your goal? It was because of those 2 properties. We have -- we know what our expenses are going to be. We have a very good handle on that. We know that room mix is improving, we know that our REVPAR is going to be up this quarter. We know that we're getting out of the summer months soon and getting into the fall, with convention business looking quite strong in the fourth quarter. And so there's no reason why we shouldn't expect to be able to achieve our long-term goals. And in fact, the focus being on margin continued to show the consecutive growth in operating margin.

Okay. I think that's a helpful clarification for people. And then the second question that I have would just be, obviously, the Delano is a pretty extensive renovation. You guys have done a lot of work at the Grand and at the Bellagio. As you look into next year, kind of, are there properties that you kind of know or slated for possible renovation activity where you kind of would expect to be more focused with some of your -- probably, your maintenance capital dollars?

I think, Shaun, as you look out into next year and we will be presenting to our board later on this year kind of the game plan for capital, the one that kind of comes to mind is the standard room tower at Mandalay for next year. So as you think about the Four Seasons has already been done, the Delano is obviously being done right now and with the expansion of convention facilities and the new restaurant product, the logical next step would be the standard room tower at Mandalay for next year, and that's probably the one that would be the priority right now.

And I don't think we -- well, I know we didn't talk about it on this call, we talked about it on the prior call, but remember that we're adding 300,000 square feet of convention space to Mandalay Bay, which is already very well occupied and large. And that breaks ground in about 1.5 months, and that opens up in the third quarter of next year, so we want to make sure when that opens up, that the entire campus is in great shape. We have received a tremendous amount of feedback and support for all of our major exhibition companies that we partner with. And so we think Mandalay is going to have a great year next year anyway, but there will be some disruption because of some room remodeling going on there at the main tower. But that expansion to the convention center, combined with the room product as we progress into '15, will, we think, accelerate the momentum at Mandalay and have, really, quite a monster year in 2016.

Great, that's helpful. My last question would just be on the Cotai. It's pretty specific. But I think as I look through the circular for MGM China and then versus the Annual Report, it looked like -- in the Annual Report, you referred to early 2016, and now, you are referring to 2016 as the target opening. Am I reading too much into that, or is the timing getting pushed out a little bit there?

First, I commend you still reading that. That's a -- it's a skill so often missed in today's analytical community. But yes, the issue with the timing and the problem with clarity is that -- and we're all faced with this, is that the permitting process is so uncertain as to future permits. There is such a backlog because there's so many towers, so many cranes, so many projects under way right now in Macau that I don't think anyone can, with any kind of precision, tell you exactly when they're going to open. They may say so, but they really don't know. I can tell you that because after spending a couple of weeks there, they just don't know. We have not missed a day. We have China State Construction building our project. They're highly experienced in that part of the world. Labor is always going to be one of the inhibiting factors. We feel that we have the right contractor to get the right kind of labor for the project, and we have received very critical permits, like the superstructure, like the MEP, which is a differentiator for us and very important. And so we feel like we're going to be able to continue to plow through and build this at a very rapid pace. But no one knows for sure exactly to the month or certainly not the day when you can open. We know we're open in 2016. We know that it's going to be in some respect outside of our control. We just feel like rather than to pin down a number or a date, we just have to be a little more general at this point in time. What we will say is that it will be perfect when we open. We're not going to rush an opening and have Coming Soon signs everywhere. So I think that, I wish we could be precise. I don't think any operator can, and we like our chances in that marketplace. But you're right. We have -- we've broadened our language on the opening date because we just -- it's beyond our control, it's beyond any operator's control in that market, and we just feel like that was the better course of action.

Our next question is from Joel Simkins of Crédit Suisse. David Michael Solomon Khabie-Zeitoune - Crédit Suisse AG, Research Division: This is actually Michael on for Joel. I just want to get your thoughts on the recent Crown transaction. First, what do you think this signals for Las Vegas Strip land values? And second, perhaps, what do you think it means for the epicenter of the Strip and how you guys are positioned longer term?

Well, we don't have all the information yet on the exact numbers. We saw what was going on. We've talked to some of our buddies, including a couple of principles there, but, clearly, the valuation is north of $9 million an acre. We're not quite sure, exactly, what the number will end up being, but for a company that owns 800 acres on the Strip, we kind of like that a lot. And we have a lot of undeveloped acreage, some of which we bought at even higher prices, back in -- before the recession. But it's certainly a bullish sign for investors that want to come into the market. We have to believe that, number one. Number two, my guess, it's only a guess, it will stimulate the beginning of the Genting project. As someone that lives here, we haven't seen any activity there, but we know it's coming, and that's also, we believe, compelling. Genting and Crown bring tremendous diversity to the customers that we receive in Las Vegas, and we have high hopes for them to grow the market in both cases. And in the case of Crown, they are partnered with Andrew Pascal, who is literally my neighbor and our friend, and a great operator and a great guy, and we know that they'll do something compelling and different. What it means is really not much for today, right, in 2014. We're talking about what Las Vegas might look like in 2017 or '18 or '19. But it does mean that there'll be thousands of jobs created, construction jobs. It does mean that it will help the local economy here, and it does mean that there will be thousands of permanent jobs, when these projects are opened and a lot of marketing dollars spent to bring…

Our next question is from Steven Kent of Goldman Sachs.

After that comment, Jim, maybe you could just talk about your thoughts about Crystals and CityCenter, since performing so well. Any thoughts on either monetizing that asset or buying back the other 50%. I couch that with the great job that Dan's done on the balance sheet, where it's not as necessary as it -- maybe we thought as necessary a few years ago. So values are going higher, it seems like things are going well, why not do something with CityCenter and Crystals at this point?

Well, thank you, and I'm looking at Bobby and he's done a -- yes, we've done a great job. Bobby has done a great job over there. Obviously, the place is generating a significant amount of free cash. If someone would sit down and figure out what the cash flow is of CityCenter against its cash interest, you'd see what the gift that has arrived for us for both owners, for both for Dubai World and ourselves. So as a major free cash flow generator, we view it as a source of great capital to deleverage the parent, much like we look at MGM China to help do the same. So I think both partners have never been more pleased, particularly given the journey that we've been on, to envision a scenario where free cash flow is generated not only to reduce the leverage at CityCenter, which is already quite low, but the dividend money back to the parents, which would accrue to both parties. Crystals, we did explore potentially selling last year, when the window of opportunity was briefly there at sub-5 cap rates for Crystals. By the time we got our documentation in order, cap rates had moved higher, and we missed that opportunity, and we're glad we did because the NOI of Crystals has gone up dramatically since that time, so -- and cap rates have come back down. We believe that Crystals is a very valuable asset. I think its NOI is like $45 million on a trailing basis. We think it's going into the $50 millions in short order. And so the question for us will become, do you sell Crystals for $1 billion, say, today, or do you wait and grow it and see how you can expand it further, which has potential? But we'll evaluate that. It was always intended to be separate from CityCenter and could always be sold. And so it's certainly an opportunity for us. As it relates to buying out our partners, I think we'll both like owning half of it so much, I'd like to own 100% of it, but you have to have somebody that wants to sell when you want to buy. And our partners don't want to sell, they like what's going on there, they like the free cash flow, they like the growth potential, they see ARIA becoming even more profitable than it is today, they like the fact that Mandarin and Vdara are making money and Crystals having a big growth path. So never say never, but these are discussions that we've informally had in the past, and you have to have a willing partner in a transaction, and both of us like being owners at CityCenter at this point.

Our last question today will come from Thomas Allen of Morgan Stanley.

Just some clarifications on your 2015 REVPAR trends in Las Vegas. You guys have talked in the past about how you saw 2014 as kind of a stepping stone and CON/AGG did create a tough comp, but you really helped to build on that. And so just given your commentary around driving kind of low single-digit rate growth and then, obviously, you're already at pretty high occupancy. I mean, with kind of a low single-digit of REVPAR growth, do you view it as a disappointment? I mean, can you do something better than that?

Yes, and I want to make sure that it's clear that the convention rate and mix isn't necessarily the only driver of REVPAR growth. So next year is a tough comp. We're coming up against CON/AGG, which is a great driver for convention business. Mike Dominguez and his team are very focused on driving the mix within convention, so corporate continues to be an increase in terms of the percentage of mix and is up from about 55% of bookings to 60% of bookings, and these are corporates that have greater F&B budgets, greater entertainment budgets, et cetera. But absolutely, REVPAR growth can be beyond what we're seeing in terms of convention rate growth. It takes time to push out some of the association business that is in there for multi-year contracts, but we continuously are increasing our pricing in convention regularly.

And, Tom, if I would just add, I would remind you that last time that CON/AGG was in, we were able to grow REVPAR by some 13% in the following year quarter and that first quarter, we were able to grow REVPAR by 4% on top of that in terms of the year-over-year growth. So the ability is there, and we're going to continue to push on rates, as you see occupancies in these buildings are approaching and in some cases are at all-time peak levels again.

Okay. And then just on Macau. I mean, you guys talked about Cotai Phase 2, I think this is the first time you really gave us any detail around it. Kind of what are you expecting to spend there? Any timing around it? Any incremental color would be helpful.

Yes. We're going through the planning process of that now. And you're right, this is the first time that we have talked about it, and we've designed it to be able to accommodate this additional tower with several hundred hotel rooms and more entertainment. Probably in the next quarter, we'll be able to give you a budget on that. We have preliminary numbers, but I'd kind of like to show it to my Board first. So I think that what the important point is on that comment is that we have been preparing our submission, we wanted to make sure that we had our permits in place, superstructure, MEP permits in place, we have those. We're now prepared to put together the document that we'll submit to the government. The government process is very specific and has changed, actually, over the past year. And so we want to make sure we submit a perfect document that will be the key to speed for approvals and for construction, and that will be the focus over the next 1 month or 2. And then next quarter, we'll be able to give you a budget on that. I would say that we're very excited about this. We have been a tremendously capacity constrained on hotel rooms in Macau. We have the smallest number of rooms. It's a problem. We continually rent rooms out at the Mandarin Oriental next door and in the city itself. We know that we can drive more mass business, which we've been the innovator on and leader. When we open up Cotai with the triple the number of rooms that we have in our current facility, and if we can expand it even further, then we think the ROI there is pretty spectacular. So we'll give you the budget on that, but the point is that we're now so far along on Cotai, with 50% of the project let out and, really, rapidly a pace that we could get to the position where we can petition the government for the Phase 2.

Thanks, guys.

Take care. Have a great day. Thank you for participating.

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